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NOTE: for full details on the criteria ICIS pricing uses in making these price assessments visit www.icispricing.com and click on “methodology”.
Alcohols prices mostly stable on feable feedstock
Fatty alcohols prices in Asia are mostly stable on the back of weaker feedstock crude palm kernel oil (CPKO) and crude coconut oil (CNO) prices. However, mid-cut C12-14 alcohol prices have fallen by $100/tonne FOB SE Asia amid weak demand and high inventory.
While some market players said prices had almost bottomed out for mid-cut alcohols, others said there is room for further downward correction of prices as CPKO and CNO prices are still firm.
The market is mainly on a wait-and-see mode as there are concerns that the US debt issue could send commodities prices crashing as was the case in the 2008 Lehman Brothers crisis. Trading activity was thin although some discussions for September cargoes were heard.
Fatty alcohols blended
The prices of mid-cut C12-14 blended alcohols are assessed at $2,250-2,350/tonne FOB SE Asia, down by $100/tonne. Bids were capped at $2,200-2,250/tonne FOB SE Asia against offers at $2,350-2,380/tonne FOB SE Asia. Although CPKO prices were traded lower in the week to Wednesday, most producers were reluctant to offer any cargoes below $2,350/tonne FOB SE Asia.
Oversupply and high inventories in China helped fuelled price declines of yuan (CNY)1,000/tonne to CNY18,000-18,500/tonne EXW. Buying activity was muted as demand in the local downstream surfactants industry had also slowed down.
Market fundamentals in the long-chain alcohols market are mostly stable. Prices fell by $50/tonne on the high end of the range at $2,050-2,100/tonne FOB SE Asia. Discussions were heard at the above published range. An unconfirmed 100 tonne parcel was heard concluded at $2,000/tonne FOB SE Asia.
In the Chinese market, prices of long-chain C16-18 alcohols rose by CNY 500/tonne at CNY14,000/tonne EXW on the back of firmer demand and tighter supply.
Pure-cut alcohol
The prices of pure-cut C8, C10, C16 and C18 alcohols remain unchanged from the previous week, in a quiet market. Demand was heard to be tapering off as buyers in the US and Europe stayed on the sidelines amid the US/Eurozone debt crisis and the European summer holidays.
Pure-cut C8 alcohol prices were flat at $2,200–2,250/tonne FOB SE Asia in drums while those of pure-cut C10 alcohol were stable at $1,500-1,600/tonne FOB SE Asia. Market discussions were range-bound.
The prices of pure-cut C16 alcohol were unchanged at $2,050-2,100/tonne FOB SE Asia in bags, while those of pure-cut C18 alcohol were stagnant at $2,450-2,550/tonne FOB SE Asia in bags.
Feedstock
The Asian and Pacific Coconut Community Organization forward month August-September coconut oil (CNO) contracts were down by $140/tonne to $1,510/tonne CIF Rotterdam this week. CPKO August contracts fell by $74/tonne to $1,295/tonne FOB Malaysia.
($1 = CNY6.42)
Softening demand in mid-cut alcohols
There were no changes in the quarterly assessments above.
Mid-cut 12-15 detergent alcohol buyers said demand was definitely softening during August, pointing to a sluggish US economy as the underlying factor.
Sources said the surfactant market was experiencing weaker demand, pushing down requirements for the mid-cuts. Surfactant buyers were mirroring buyers in other market segments by monitoring purchasing and keeping minimal inventories.
Supply-demand fundamentals for US fatty alcohols were reaching a balance, adding to the effect of lower feedstock Asian oil prices as reasons for buyers to expect another round of price decreases when Q4 contract negotiations begin late this month.
Buyers said coconut oil (CNO) prices had fallen into the 80s cents/lb in the US, and lower in the Rotterdam market, following palm kernel oil (PKO).
Suppliers said current oil stocks were purchased at the higher prices, justifying Q3 contract levels, and offering only moderate support for additional price relief in Q4 negotiations.
At least one importer not able to bring in material in Q2 because of a major plant outage verified it was now actively importing small tonnage in blended alcohols.
Activity in the European fatty alcohols market has quietened, with many market participants away for the summer period.
Some buying interest was shown by participants looking for material on a spot-basis, with mid-cut material offered between €2,000-2,100/tonne FD NWE.
Increasing numbers of buyers preferred to delay negotiations, however, in the hope of a further decline to fatty alcohol prices.
The ongoing debt crisis in both the US and Europe continues to concern participants, with many believing demand for fatty alcohols may decline further going into the latter part of the year.
One buyer purchased lower volumes than normal due to excess levels of material left over from the previous quarter.
With the high costs of feedstock being primarily absorbed by the end user, the buyer was certain demand would dampen further and preferred to shift stock currently in storage before purchasing any significant volumes.
Although significantly lower price ranges were heard from buyers looking for mid-cut material, one producer disputed this and felt it would be unrealistic for producers in East Asia to offer material as low as €1,700/tonne FD NWE.
With weaker demand and lower feedstock costs causing spot fatty alcohol prices in southeast Asia to plummet, many buyers were hopeful for a similar decline in prices in Europe.
Traders were however unsure whether this was achievable and felt that while the provisional anti-dumping duties were still in place, an upwards pressure on fatty alcohol prices would continue to influence the European market.
News that Cognis has lifted its force majeure declaration on unsaturated fatty alcohols from its Dusseldorf-Holthausen plant has seen increased availability of the product from the specialty chemicals company.
The company stated this week they will be increasing Ocenol production at their sites in France and Germany to offer greater volumes of C18 unsaturated grades compared with last year.
($1=€0.70)
This week on ICIS ( www.icis.com):
09/08/2011 12:01 Germany's Cognis lifts FM on unsaturated fatty alcohol supplies
05/08/2011 12:00 Indonesia crude palm oil prices continue downtrend
04/08/2011 13:15 Malaysia CPO prices steady, Indonesia CPO falls
